Customer attitude towards plastic money

Project Report on “A Study on Changing Attitude of Customers towards Plastic Money”

Bachelor of Commerce Banking & Insurance Semester-V

Submitted By Mr. Akhilesh G. Pillai Roll No. 46

BIRLA COLLEGE OF ARTS, SCIENCE & COMMERCE Murbad Road Kalyan (W) University of Mumbai (2009-2010)

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Customer attitude towards plastic money

Project Report on “A Study on Changing Attitude of Customers towards Plastic Money”

Bachelor of Commerce Banking & Insurance Semester-V (2009-2010)

Submitted In partial fulfillment of requirement for the Award of Degree of Bachelor of Commerce (Banking & Insurance)

By Mr. Akhilesh G. Pillai Roll No. 46

BIRLA COLLEGE OF ARTS, SCIENCE & COMMERCE Murbad Road Kalyan (W)
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Customer attitude towards plastic money

BIRLA COLLEGE OF ARTS, SCIENCE, & COMMERCE, KALYAN (Conducted by Kalyan Citizens’ Education Society) (Affiliated by University of Mumbai)

BACHELOR OF BANKING AND INSURANCE CERTIFICATE This is to certify that Mr. Akhilesh G. Pillai of T.Y.B.Com. Banking & Insurance (Semester V) has successfully completed the project on “A Study on Changing Attitude of Customers towards Plastic Money”, under the guidance of Mr. Sachin Achrekar.

Principal Project Guide Course Co-ordinator Internal Examiner External Examiner

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Customer attitude towards plastic money

Declaration I, Mr. Akhilesh G. Pillai, student of T.Y.B.Com (Banking & Insurance) Semester V (2009-2010) hereby declare that I have completed the project on “A Study on Changing Attitude of Customers towards Plastic Money”. I further declare that the information contained in this project report is genuine, true & fair to the best of my knowledge.

Signature (Akhilesh G. Pillai)

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Customer attitude towards plastic money Acknowledgement If words are considered to be signs of gratitude then let these words convey the very same. My sincere gratitude to Mumbai University for providing me with an opportunity to get practical as well as theoretical knowledge of plastic money and giving necessary directions by my guide on doing this project to the best of my abilities. I also thank to Prof. Mr. Sachin Achrekar who has provided me with the necessary information and also for the support extended out to me in the completion of this project and his valuable suggestions and comments on bringing out this report in the best way possible. I am grateful to all faculty members of Birla College and my relatives and friends who had helped me in the successful competition of this project. I am highly indebted to Branch Manager of IDBI Bank and project guide Prof. Akhilesh G. Hema Tahilramani who has sincerely supported me with valuable insights into the completion of this project. Pillai 5 .

8. Preface 1. 9.Customer attitude towards plastic money CONTENTS SR NO. 2. 6. 3. 6 . 4. 10 Introduction of Money Plastic Money in India Features of Plastic Money Types of plastic money Rise of plastic money Plastic card and its uses Safety and Precautions in plastic money Credit card and Debit card Parties involved in transactions Customer attitude towards plastic money Report on visit to a Bank Conclusions Bibliography Wibliography Annexure ‘A’ Annexure ‘B’ TOPICS PAGE NO. 5. 7.

but when frauds were started increasing in paper money people were losing their faith on paper money. Research Methodology: 7 . Thus from this we can see the changing attitude of customers. When plastic money was first introduced people were not very free to use it.Customer attitude towards plastic money PREFACE It is my proud privilege to present this project on “A study on changing attitude of customers towards plastic money” to Mumbai University. In the initial stage paper currencies were popularly used against the goods which finally leads to an end of barter system. People were considered paper money as a purchasing power but due to increase in income the value of money were started declining. • • • To bring out different types of plastic money offered exclusively by banks. Objectives of the study:• To find out the features of credit cards offered to the customer by the banks through personal approach. To prevent the causes for risk involved in the credit card business. To find out the customers attitude towards plastic money. They thought carrying a plastic card is far more safer than carrying a hard cash. Under plastic money debit card issued by bank helps the customer to an easy access as and when they are in need for money whereas the credit card issued by bank in which the issuing bank gives credit to its customer and earns commission and interest through it. Thus in the real sense plastic money came into existence.

a banker named Johan Palmstruch began to issue credit notes that could be exchanged at his Stockholm bank for stated numbers of silver coins. In 1455. Too much of it was printed and this led to inflation. China got carried away with the ease of producing this new form of cash. The first banknotes were issued in China during the reign of Emperor Hien Tsung (AD806821). He issued more notes than his bank had silver deposits to redeem. Unfortunately for Palmstruch. Eventually. He was initially sentenced to death. who had consulted the Swedish government before launching the scheme. but not as a result of any great financial insight. The Chinese experience was repeated when Sweden became the first European nation to experiment with paper money.1 The Introduction of Money The Rise of Paper Money The next phase in the evolution of currency was the invention of paper money. he got carried away with his licence to print money. but the penalty was later commuted to imprisonment. the Chinese abandoned the use of paper money and did not return to it for several centuries. and in 1668 was prosecuted for fraud. The sole reason for their introduction was an acute copper shortage that precluded the striking of new coins. 8 . In 1661.Customer attitude towards plastic money • • Secondary Data Primary Data CH.

that propelled governments into joining the Gold Standard. you would feel foolish. This recognition led to the establishment of the first national central banks. The Gold Standard was a mechanism that fixed the values of the coins and banknotes of participating nations in terms of specified quantities of gold. People were much more likely to trust notes backed by government reserves than those issued by private institutions. if you continued to sell your eggs at the old price. As economic activity increased in Europe. it became apparent that the money supply needed to be expanded beyond the limits imposed by holdings of precious metals.867 dollars to the pound necessarily followed. for example (as it did from 1834 until 1933). The Standard operated both domestically and internationally. the tide of history was firmly on the side of the new form of currency. a measure that harked back to the days when all money really was made of precious metal. an exchange rate of $4.) It was the risk of inflation. imagine you were an egg seller and everyone suddenly had twice as much cash. If the US set the price of gold at $20. not to say cheated.Customer attitude towards plastic money Despite the less than glorious outcomes to these early trials of paper money.5 pence. it forestalled inflation by ensuring that the money supply remained relatively constant. it had the effect of fixing exchange rates between the nations involved. among other factors. 9 . In the international sphere. The Gold Standard Entrusting the issue of banknotes to one central authority effectively removed the danger of bankruptcy. as happened in Britain during the "Restriction Period" of 1797 to 1821. but it did raise the spectre of inflation.67 per ounce. On the domestic front. They even proved willing to accept temporary governmental bans on the redemption of banknotes for silver. as it did from 1844 until 1931 (apart from a period after the First World War). This would happen if a central bank printed too much money. and the UK set it at three pounds 17 shillings and 10. (To understand this.

its prices would rise. Unfortunately. Assuming US prices stayed the same. At the same time. The trouble was that many nations were inclined to cheat. The Gold Standard worked very well so long as everyone played nicely. It was reinstated in modified form in 1925. but the key feature was that all participating nations apart from the US were allowed to settle their debts in US dollars. The successor to the Gold Standard was the Bretton Woods system. exchange rates were fixed (within a margin of 1 per cent). They started printing money to finance their war efforts and the Gold Standard broke down. When the First World War broke out in 1914. which placed the entire system in jeopardy. If the UK made a technological breakthrough that increased economic output. In 1931. its prices would fall. inflation between 1880 and 1914 averaged a mere 0. this was the final nail in the coffin. In the US. the stuff in which payments were made – would flow out of the US and into Britain. 10 . In 1971. For the Gold Standard. particularly when the going got tough.1 per cent per year. The upshot would be that gold – that is. Hey presto. this would make UK products more attractive from an American perspective. everyone ended up more or less where they had been in the first place and price stability was restored. but collapsed again due to instability caused by the Great Depression. The US promised to redeem the dollar holdings of other countries for gold at a fixed rate of $35 per ounce. Once again. and American products less attractive to the UK. named after the New Hampshire resort where the Second World War Allies thrashed out the details in 1944. President Nixon announced that the US would no longer be paying out gold for dollars. the countries involved threw their rule books out of the window. for example. US prices would fall in line with the nation's own money supply. As the money supply/amount of gold in Britain had now increased. this offer was taken up to the extent that the US started running out of gold.Customer attitude towards plastic money The benefits of fixed exchange rates included stability and a balancing of prices between subscribing nations. Britain left the Gold Standard as a result of massive outflows of gold from the nation's coffers.

7 billion passing through the system. Though bounders could be relied upon to write bouncing cheques. it was relatively difficult to open an account with one of the clearing banks. Then we all became more prosperous. debit cards and cheques Not so long ago. The manual working classes relied on a little brown envelope of notes and coins at the end of the week. Print too much of it and you end up in a right mess. and remained "unbanked" until well into the 1970s. ("This piece of paper can be used to pay debts because we say it can. and falling. and the Mainwaring and Wilsons who ran the institutions long catered principally to the professional classes. it's about one-third of that level now. National Westminster Bank even raised eyebrows by allowing the customers the option of "pictorial" cheque-books. featuring images of badgers and bunny rabbits.") The use of fiat money obviously places a greater responsibility on governments than they had in the days when currency had to be backed by precious metals. by 1995. now almost extinct. and 11 . The first Switch card transaction took place in 1988. discussing their affairs over a glass of Amontillado in the manager's office. the world economy has largely run on a system of floating exchange rates. happily still with us) just so that the bank could enjoy the mixed pleasure of them running up enormous overdrafts. Credit cards. with gold-backed currency replaced by what is called " fiat money".Customer attitude towards plastic money Fiat money Since 1971. the banks discovered marketing (black horses running across the landscape) and students were being offered rail cards and book tokens (another quaint form of money. a sort of cheque guarantee card without the cheque. If they wanted to send money away they relied on the postal order. for most of the 20th century the possession of a current account denoted respectability. The reason is the debit card. with 2. In the 1980s. Cheque use peaked in 1990. This is money that has no intrinsic value and obtains its worth entirely on the basis of governmental decree. they had overtaken credit cards in popularity.

At any rate. acquiring £3. the teenager of today is far more likely to have plastic than a building society E-money: the future of cash We may not be that far away from a world where cash follows the cheque book into oblivion and few transactions are conducted face to face. they could all go cashless.60 by 53. First.Customer attitude towards plastic money cheques fell behind them in 1998. There are in excess of 20 billion payments of less than £10 made every year. two of them specifically creations of the internet. the astronomical APR (annual percentage rate of interest) and overlenient credit limits led to the inevitable personal mini credit crunch. that is. You and the "shopkeeper" never actually meet. the extent of the credit card's true perniciousness is becoming apparent. each debit-card holder used their cards 166 times on average. anyone from Tesco to Amazon and lastminute. The launch of the Barclaycard in 1966 (and its now defunct but long-running rival Access in 1972) was the start of "plastic" – the discovery that a small rectangle of polyvinylchloride (always measuring 85. now that he's been allowed to make the acquaintance of the "sub prime" community in the United States and Britain. Our "flexible friend" (as the Access card marketing line went) had a nasty habit of landing us in economic trouble.com – that you feel happy to tap your payment card details on to a web page. 12 .848 in "cashback" and making purchases worth £4. E-money comes in three forms. Last year. Until. However. British consumers were not to be constrained by such trivial considerations as how much money they had in the bank. and you never leave your home or office. 0 per cent cards were being offered to lure customers. The modern British addiction to debt can be traced back precisely to the advent of the credit card.98mm) could transform your life. and those who took advantage of the initial free offers and then transferred the balance to the next free offer when the interest became due were known as "rate tarts". By the 1990s.799. The advent of "chip and PIN" greatly reduced the scope for fraud. there is the "card not present" phenomenon. where you have sufficient faith in the online retailer – nowadays. we save less than at any time since the 1950s.

yet it now operates in 103 markets. This is what the "contact less" card promises. your money may even spy on you. receive and hold funds in currencies from the US dollar to the Polish zloty. In a Bourne-style nightmare. possibly nonchalantly. credit cards and debit cards and their replacement by one single means of payment. Second. so called because you don't even have to put it into a reader to buy something. Thus can "they" know about your purchase of The Independent. 13 . cheques. manages more than 133 million accounts and allows customers to send. the SIM card in your mobile phone could be used to pay for the little things in life (they're trying this out in South Korea). as featured. you will be being monitored. a flapjack and day trip to Tate Modern. on eBay.Customer attitude towards plastic money Money thus moves from being a physical commodity – a gold coin. and a "One Touch" contact less technology card. for example. and trusted. The real revolution. may be the abolition of cash. Alternatively. And in the future. It allows cardholders to make purchases of £10 or under more quickly and conveniently with a single touch of their card against a reader instead of entering a PIN or signature. with 4. was launched only a month ago. a paper banknote or a plastic card – to being a purely virtual commodity (though of course banks themselves have long held your current account in virtual form. your every move and tiniest purchase will then be tracked by your bank and. The Barclaycard One Pulse card. Perhaps the most high profile of these is Pay Pal. This is the novel bit.000 guinea-pig customers in London. Either way. thus reducing the need to use and carry cash. a Barclaycard. though. Barclays Bank can chart its origins back to 1685. Pay Pal dates back only to 2000. Money is what money does. as a series of binary codes in a computer file). if legislation allows. we have seen the growth of outfits specifically set up to facilitate payments on the web. according to the old adage. at the shop assistant. officialdom. It will combine the functions of an Oyster card (Transport for London's existing "cashless" method of prepaying for bus and Tube journeys). which you just wave. the Royal Bank of Scotland to 1727 and Lloyds to 1765.

Customer attitude towards plastic money OF HISTORY MONEY 14 .

First Metal Money China. or money.C. Barter is the exchange of personal possessions of value for other goods that you want. From these models. I could ask another farmer to trade a pound of apples for a pound of bananas. people used crops for barter.. From 9. This kind of exchange started at the beginning of humankind and is still used today. like knives and spades. Later. They can be thought of as the original development of metal currency.000 B. in China. in 1.C.C. The cowry has served as money throughout history even to the middle of this century. tools made of metal.000-6.Customer attitude towards plastic money Barter The first people didn't buy goods from other people with money. were also used in China as money. we developed today's 15 .. In addition. They used barter. as agriculture developed. Shells At about 1200 B. livestock was often used as a unit of exchange. For example. cowry shells became the first medium of exchange.000 B. produced mock cowry shells at the end of the Stone Age.

and various rituals. Noses During the ninth century A. gold. Unfortunately. and further improved upon by the Greek. the Danes in Ireland had an expression "To pay through the nose.. the first actual paper currency was used as money. which relied on base metals.C.C. Macedonian. potlach went out of control as the gifts became more extravagant in an effort to surpass others' gifts. a term that describes the exchange of gifts at banquets. Leather Currency In 118 B. in China. and silver. banknotes in the form of leather money were used in China. These coins were first shown in Lydia. but the methods were used over and over again.. The Chinese coins were usually made out of base metals. Persian. European civilization still would not have paper currency for many years. Since the trading of gifts was so important in figuring the leaders’ community status. these new coins were composed from scarce metals such as bronze. This is believed to be the beginning of a kind of paper money.D." It comes from the practice of cutting the noses of those who were careless in paying the Danish poll tax. Potlach In 1500.Customer attitude towards plastic money round coins that we use daily. which had a lot of intrinsic value... North American Indians engaged in potlach. dances. pieces of silver were the earliest coins. in 1455 the use of the currency vanished from China. which had holes in them so that you could put the coins together to make a chain. and Roman empires. Silver At about 500 B.D. during this time. Eventually in time they took the appearance of today and were imprinted with numerous gods and emperors to mark their value. One-foot square pieces of white deerskin edged in vivid colors were exchanged for goods. 16 . Not like Chinese coins. or Turkey. Paper Currency From the ninth century to the fifteenth century A. Through this period the amount of currency skyrocketed causing severe inflation.

This would help to prevent inflation of currency. Fake currency detection 17 .S. the color of the clam shells and the beads. Today At present. though likely well before this earliest recorded date. began a world wide movement to end tying currency to gold. Today. This meant that the value of currency was pegged to a certain number of ounces of gold. For example. strings of beads made from clam shells. has already changed its $100 and $20 banknotes. few nations tie the value of their currency to the price of gold. Electronic money (or digital cash) is already being exchanged over the Internet. England made gold a benchmark of value. Depression Because of the depression of the 1930's. Other government and financial institutions now try to control inflation. called wampum. are used by North American Indians as money.Customer attitude towards plastic money Wampum In 1535. the U.S. nations continue to change their currencies. Gold Standard In 1816. the U. Tomorrow Tomorrow is already here. went on the gold standard in 1900. Wampum means white. More changes are in the works. Frauds in Paper Money Counterfeit money (Indian rupee notes).S. The U.

000 pieces per hour. B. Therefore more and more people have just started to live as is. knowing that is a fake. each having a processing capacity of 50. Fake Indian currency of 100. you can even go to jail. RBI itself has installed currency verification and processing systems in its various offices. Most people just pass it along to others. Trying to pass on a currency note. is a punishable offence under sections 120-B. FOR TOURISTS For people travelling to India. PROBLEMS PEOPLE MAY FACE REPORTING / NOT REPORTING If you are found to posses fake currency notes. C & D of the Indian Penal Code. Most people do not want to deal with this problem in a legal way because our law enforcement (police) and legal system (courts) are not so easy to deal with. if someone objects you just give different note.000 to 60. 420 and 489-A. in India it is quite different as most people avoid contacting police because those investigations can be painfully inconvenient and especially because many people in law enforcement are not exactly honest. The legal system is even more troublesome. even a smallcourt case in India can easily drag for months and years. The fake currency is then sent to RBI or destroyed. Unlike most developed countries where a common person feels free to report even a smallest problem to the police. It is not possible check each and every currency note you receive in a bundle. and you cannot explain where you got them from.500 and 1.Customer attitude towards plastic money Counterfeit notes are a problem of almost every country but India has been hit really hard and has become a very acute problem. Infact most people in India do not even know how to the things to check that differentiates a fake note from a real one. Possession of counterfeit notes too is punishable with punishment as harsh as life imprisonment.000 rupees seems to have flooded the whole system and there is no proper way to deal with them for a common person. The legal way to handle is to lodge a police complain and mention the source of the currency and then further investigations are done. always take money from authorized dealers and insist on a 18 .

” 19 . HOW MUCH MONEY IN INDIA IS FAKE: In year 2006: The Reserve Bank of India has estimated the amount of fake currency in circulation at almost 1. Similarly convert your currency back from an authorized place only. Fake foreign currency is common in tourist areas. The report shows that the number of counterfeit notes seized during the year rose 87 per cent to 195. Never fall in prey to a person who offers to give you a better exchange rate than exchange rate without receipt. the report said. I am sure it is much-much higher now.7 trillion rupees. "The RBI annual report has confirmed all the fears of the security agencies on fake currency notes in the country. This proves the source of your funds in India.Customer attitude towards plastic money currency exchange receipt.743 in the previous year.811 in FY08 compared to 104.

Identify fake Indian Rupees 20 .Customer attitude towards plastic money Know your Bank Note Currency .

Customer attitude towards plastic money 21 .

Customer attitude towards plastic money 22 .

Customer attitude towards plastic money 23 .

Customer attitude towards plastic money 24 .

25 . Fake currency notes tend to have silver-coloured band painted in place of the silver thread. Also. The best way to identify a note is the silver bromide thread that runs vertically through a currency note.which can be viewed with the help of a magnifying glass are between the Mahatma Gandhi portrait and the vertical band. Micro lettering: The 'RBI' and the numeral. in a real note. "1000" . A real note has a prominent thread with raised 'RBI' markings made on it in English and Hindi. the picture of Gandhi and an electrolyte mark showing the number 1000 appear in the white space. the vertical band on the right shows an image of the number 1000. Latent Image: When the note is head horizontally. the colour of the thread shifts from green to blue when viewed from different angles.Customer attitude towards plastic money Optical Variable Ink: The colour of the numeral 1000 appears green when the banknote is held flat but would change to blue when the banknote is held at an angle. The font size is also reduced. Security Thread: The note also has a three millimeter wide security thread with the inscriptions: one thousand. Watermark: When the note is held against the light. the word 'Bharat' in Hindi and RBI.

These financial institutions have tried their hands on ensuring value-addition while offering customer-friendly credit card deals. no one wants to be bothered by the presence of huge cash in his or her wallet and the Indians are no exceptions. students and small business owners. HSBC and Standard Chartered to name a few. The Best credit cards in India are usually meant for specific user group such as women. online shopping stores and shopping complexes have contributed to the growth of the use of plastic cards. electricity. The unprecedented growth in the number of credit card users has stimulated the Indian economy by a significant extent. Best credit cards (India) In context of the Indian market. Statistics have clearly revealed that the numbers of credit card holders in India are close to 26 . These cards are offered to the prospective customers with appealing deals. The arrival of malls.Customer attitude towards plastic money CH. movie tickets and other related transactions have also contributed to the growth of plastic money in the country. The modern day Indian customers find it easier to make physical payment (credit card payments) rather than carrying too much cash. In the present day world. the leading credit card service providers are ICICI. multiplexes. The introduction of credit card facilities to pay for mobile. The benefits of plastic money have offered unmatched ways to create equilibrium and offer an amicable solution when it comes to purchases and the inability to possess or carry cash.2 Plastic Money in India Plastic Money never saw it Better in India than Now! India has come out of self-binding shackles to look "young" again and the enthusiasm shared by the young work force of the country is driving the economy like never-before. HDFC. It will not be wrong to say that such a scenario in context of the Indian market is not driven by style statement and is driven more by needs.

The credit card system started in India While the first card was issued in India by visa in1981 and country first gold card was also issued from the same. The report of the group was placed in public domain on April 23.33 crores.Customer attitude towards plastic money 22 million as of January. 2007. However the credit card industry in India grown exponentially in its 15 years of business in the country it had issued 2. member of the public and other on the report of the working Group. when finally issued would be applicable to all commercial banks/non-commercial finance companies (NBFC’s) and would come to effect as soon as implemented. The draft guidelines are as each Bank /NBFC has a well documented policy and a fair practices code for credit card and should widely disseminate contents. after getting through special permission from RBI later the AZN credit cards came in 1989.69 crores card till December 2003. The first international credit card was issued to a restricted number of customers by Andhra bank1987 through the visa programme. RBI Guidelines on credit card operations The reserve bank of India has placed draft guidelines on credit card operation from the members of the public. 27 . the figure has spurted to 4. It may be recalled that the Reserve bank had constituted a working Group to evolve a regulatory mechanism for cards to ensure orderly growth of this segment of consumer credit and protect the interest of banks / NBFC and their customers. However in just one year 2004. FY 2006-07 and 2007-08 and the same. The draft guidelines issued now have been framed taking into account the feedback received from media. The guidelines. It has been also revealed that the increasing consumerism in the country has led to a two-fold increase in the number of credit card transactions from FY 2003-04 to 2005-06. 2005. The trends were as favorable as ever in the financial years.

accessible credit. credit cards offer consumers an easy way to track expenses. Credit cards are accepted worldwide. or even cheques. limit the amount for which a consumer can be held liable due to fraudulent transactions as a result of a consumer's credit card being lost or stolen. and France. interchange fees have been set by the bank card associations and their major cardissuing banks. but will vary not only from merchant to merchant. with business cards and rewards cards generally costing the merchants more to process). Interchange fees are the single largest component of the various fees that banks deduct from merchants' credit card sales. Some countries. such as the United States. repayment arrangement.Customer attitude towards plastic money CH. but also from card to card. and other perks (such as rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or credit card cash back). the United Kingdom. or will add a percentage to the sale price to cover the interchange fee. which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes. Merchants pay their banks fees of 1 to 6 percent of each sale (for large merchants these fees may be negotiated. and are available with a large variety of credit limits. Card-issuing banks obtain these interchange fees in addition to the enormous revenue they receive from card holder interest and fees. who are the primary beneficiaries of these fees. which is why many merchants prefer cash.3 EATURES OF PLASTIC CARDS As well as convenient. PIN-based debit cards. 28 . Traditionally. Revenues: Offsetting costs are the following revenues: • Interchange fee Bank card associations such as Visa and MasterCard require merchants to pay billions of dollars in Interchange fees to banks that issue their credit and debit cards.

The United Kingdom is the world's most credit-card-intensive country. Interchange fees may consume over 50 percent of profits from card sales for some merchants (such as supermarkets) that operate on slim margins. the merchant's average transaction amount. the merchant's total card sales volume. when the transaction is settled. New York. 29 . California. whether the cards are physically present. Kansas. the authorized and settled transaction amounts. and Texas have laws against surcharges. Maine. Massachusetts. For a typical credit card issuer. etc. interchange fee revenues may represent about a quarter of total revenues. Colorado. Oklahoma. if the card's magnetic stripe is read or if the transaction is hand-keyed or entered on a website. such as the potential profitability of operating in those areas. based on their ethnic-minority composition. but this will vary greatly among credit card issuers. In the United States. Florida. a number of states have since enacted laws that continue to outlaw the practice. until 1984 federal law prohibited surcharges on card transactions. Merchants contend That interchange fees force them to raise prices for everyone. with 67 million credit cards for a population of 59 million people.Customer attitude towards plastic money The interchange fee that applies to a particular merchant is a function of many variables including the type of merchant. banks contend that interchange fees enable them to offer better cardholder rewards for their best customers. Although the federal Truth in Lending Act provisions that prohibited surcharges expired that year. rather than on economic criteria. the specific type of card. Redlining Credit Card redlining is a spatially discriminatory practice among credit card issuers of providing different amounts of credit to different areas. Connecticut. Hidden costs In the United Kingdom. merchants won the right through The Credit Cards (Price Discrimination) Order 1990 to charge customers different prices according to the payment method.

and in the most extreme cases. However. or more likely. Profits and losses In recent times. lists "R9" in the "status" column to denote a charge-off.Customer attitude towards plastic money Operating costs This is the cost of running the credit card portfolio. If the amount is large (generally over $1500 . largely due to the booming economy of the late nineties. since the business is essentially one of making unsecured (uncollateralized) loans. for instance. as the charge off number climbs or becomes erratic. to running the computers that keep track of every cardholder's balance. It will then be listed as such on the debtor's credit bureau reports (Equifax. bad debts and even fraud are simply part of the cost of doing business. officials from the Federal Reserve take a close look at the finances of the bank and may impose various operating strictures on the bank. which is usually 3 to 7 years. to taking the many phone calls which cardholders place to their issuer.$2000). in the case of credit cards. to mailing the statements. credit card portfolios have been very profitable for banks. and the creditor can attempt to collect the full amount for the time periods permitted under state law. However. to protecting the customers from fraud rings. such high returns go hand in hand with risk. the debt is still legally valid. A charge-off is considered to be "written off as uncollectable. marketing programs are also a significant portion of expenses. Depending on the issuer. there is the possibility of a lawsuit or arbitration. In the US. and thus dependent on borrowers not to default in large numbers. including everything from paying the executives who run the company to printing the plastics. the creditor may declare the debt to be a charge-off. and the amount of the bad debt. may close the bank entirely. 30 ." To banks. an outside collection agency. This includes contacts from internal collections staff.) The item will include relevant dates. Charge offs When a consumer becomes severely delinquent on a debt (often at the point of six months without payment).

Customer attitude towards plastic money Costs Credit card issuers (banks) have several types of costs: Interest expenses Banks generally borrow the money they then lend to their customers. • Problems A smart card. If the card issuer charges 15% on money lent to users. This opportunity has created a huge black market in stolen credit card numbers. 31 . combining credit card and debit card properties. or an unauthorized duplicate made. and the balance sits with the cardholder for a year. Credit card companies generally guarantee the merchant will be paid on legitimate transactions regardless of whether the consumer pays their credit card bill. especially in mail order cases where the merchant cannot claim sight of the card. they may borrow as much as their customers require. the issuer earns 10% on the loan. while lending their capital to other borrowers at higher rates. These refunds will. therefore merchants usually require ID card in these countries. most card issuers will refund some or all of the charges that the customer has received for things they did not buy. and it costs 5% to borrow the money to lend. in the UK in 2004 it was over £500 million. In several countries. The 3 by 5 mm security chip embedded in the card is shown enlarged in the inset. This 5% difference is the "interest expense" and the 10% is the "net interest spread". be at the expense of the merchant. When a card is stolen. The low security of the credit card system presents countless opportunities for fraud. The contact pads on the card enable electronic access to the chip. which are generally used quickly before the cards are reported stolen. As they receive very lowinterest loans from other firms. in some cases. merchants will lose the money if no ID card was asked for. Frauds in plastic money The cost of fraud is high.

Third. anywhere card details become human-readable before being processed at the acquiring bank.S. but to "reduce it to manageable levels". 32 . For example. Three improvements to card security have been introduced to the more common credit card networks but none has proven to help reduce credit card fraud so far. Second.Customer attitude towards plastic money The goal of the credit card companies is not to eliminate fraud. federal officials only prosecute cases exceeding US $5000 in value. However. First. the simplest being copying information from retailers. the cards themselves are being replaced with similar-looking tamper-resistant smart cards which are intended to make forgery more difficult. the on-line verification system used by merchants is being enhanced to require a 4 digit Personal Identification Number (PIN) known only to the card holder. with a very low limit. The Federal Bureau of Investigation and U. and typically only valid with a single merchant. but they do not have the resources to pursue all criminals. This implies that high-cost low-return fraud prevention measures will not be used if their cost exceeds the potential gains from fraud reduction. Naturally. In general. The majority of smartcard (IC card) based credit cards comply with the EMV (Euro pay MasterCard Visa) standard. for use in "card not present" transactions. generated as needed. a website that uses SSL to encrypt card numbers from a client may simply email the number from the web server to someone who manually processes the card details at a card terminal. either online or offline. Controlled Payment Numbers are another option for protecting one's credit card number: they are "alias" numbers linked to one's actual card number. Most internet fraud is done through the use of stolen credit card information which is obtained in many ways. valid for a relatively short time. a security risk is created. an additional 3 or 4 digit code is now present on the back of most cards. many banks offer systems where encrypted card details captured on a merchant's web server can be sent directly to the payment processor. systems with security holes are usually the result of poor implementations of card acquisition by merchants. Postal Inspection Service are responsible for prosecuting criminals who engage in credit card fraud in the United States. Despite efforts to improve security for remote purchases using credit cards.

5. for 1. All the information is collected by credit bureaus. 33 . The credit information stays on the credit report. depending on the jurisdiction and the situation. 2.Customer attitude towards plastic money The way credit card owners pay off their balances has a tremendous effect on their credit history. 7 or even 10 years after the debt is repaid.

much the same way that credit cards are. Charge card A charge card carries all the features of credit cards. Debit card Debit cards are substitutes for cash or check payments. If you fail to do so. by the due date. The institution which issues the card makes the payment to the outlet on your behalf. When you use a credit card you are not declared a defaulter even if you miss your due date. When a debit card is used to make a payment. you will pay this 'loan' back to the institution at a later date. you are likely to be considered a defaulter and will usually have to pay up a steep late payment charge. banks only issue them to you if you hold an account with them. the total amount charged is instantly reduced from your bank balance.Customer attitude towards plastic money Ch. This card is typically meant for high-income group categories and companies and may not be 34 . All you need to do is produce the card and sign a charge slip to pay for your purchases. Amex card Amex stands for American Express and is one of the well-known charge cards. A 2. A debit card is only accepted at outlets with electronic swipe-machines that can check and deduct amounts from your bank balance online. However. after using a charge card you will have to pay off the entire amount billed. 4 TYPES OF PASTIC CARDS Credit card A credit card is plastic money that is used to pay for products and services at over 20 million locations around the world. However.95 per cent late payment fees (this differs from one bank to another) is levied in your next billing statement. This card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa.

Photo card 35 . Currently this product is available only in very developed countries like the United States and is being used only sporadically in India. It would be a good idea to check whether a member establishment does accept the card or not in advance. They have built a vast network of merchant establishments so that customer’s world-wide may use their respective credit cards to make various purchases. Smart card A smart card contains an electronic chip which is used to store cash. Besides. signature or payment authorization is required for using this card. This is most useful when you have to pay for small purchases. Diners Club card Diners Club is a branded charge card. The exact amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines. There are a wide variety of special privileges offered to the Diners Club cardholder. However. as a cardholder you can set your own spending limit. MasterCard and Visa MasterCard and Visa are global non-profit organizations dedicated to promote the growth of the card business across the world. There are a wide variety of special privileges offered to Amex cardholders. No identification. since this card is typically meant for high-income group categories. for example bus fares and coffee. No change is given. it may not be acceptable at many outlets.Customer attitude towards plastic money acceptable at many outlets. the card has its own merchant establishment tie-ups and does not depend on the network of MasterCard or Visa. For instance.

then you have what is known as a photo card. You can apply for this card in the name of family members like your father/ mother/ spouse/ brother/ sister/ all children above 18 years of age. your photo card can function as your identity card as well. Affinity card The card issuer ties up with popular organizations/ institutions which are often non-profit organizations (City-WWF card or the Stan chart-Cricket cards) to offer an affinity card. You are liable to make good all the payments for the purchases made using the add-on card(s). free entry to Times Music events. the Citi-Times card gives you all the benefits of a Citibank credit card along with a special discount on Times Music cassettes. Doing this helps identify the user of the credit card and is therefore considered safer.Customer attitude towards plastic money If your photograph is imprinted on a card. Global card Global cards allow you the flexibility and convenience of using a credit card rather than cash or travelers checks while travelling abroad for either business or personal reasons. Co-branded card Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the purpose of offering certain exclusive benefits to the consumer. 36 . For example. Your billing statement would reflect the details of purchases made using the add-on card. in many cases. etc. Besides. When the card is used. a certain percentage is contributed to the organization /institution by the card issuer. Add-on card An add-on card allows you to apply for an additional credit card within the overall credit limit.

They are often offered as a means of rebuilding one's credit. In some cases. Secured credit cards are available with both Visa and MasterCard 37 . the card issuer has the option of recovering the cost of the purchases paid to the merchants out of the deposit. as with a regular credit card. Credit card issuers offer this because they have noticed that delinquencies were notably reduced when the customer perceives something to lose if the balance is not repaid. In these cases the total debt may far exceed the original deposit and the cardholder not only forfeits their deposit but is left with an additional debt. This means that an account which is less than 150 days delinquent will continue to accrue interest and fees. The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus. credit card issuers will offer incentives even on their secured card portfolios. Thus if the cardholder puts down $1000. This allows for building of positive credit history. Usually the deposit is only used as an offset when the account is closed. and can be as low as 10% of the desired credit limit. Typically. the deposit required may be significantly less than the required credit limit. This deposit is held in a special savings account. but should they default on a payment. Most of these conditions are usually described in a cardholder agreement which the cardholder signs when their account is opened. the cardholder must deposit between 100% and 200% of the total amount of credit desired. Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer. In these cases.Customer attitude towards plastic money Secured credit cards A secured credit card is a type of credit card secured by a deposit account owned by the cardholder. and could result in a balance which is much higher than the actual credit limit on the card. they will be given credit in the range of $500–$1000. either at the request of the customer or due to severe delinquency (150 to 180 days). the deposit will not be debited simply for missing one or two payments. The cardholder of a secured credit card is still expected to make regular payments. Secured credit cards are an option to allow a person with a poor credit history or no credit history to have a credit card which might not otherwise be available.

With prepaid credit cards you are not charged any interest but you are often charged a purchasing fee plus monthly fees after an arbitrary time period. such as a parent or employer. Sometimes a credit card will be secured by home. for people in certain situations. even including the security deposit. American Express or Discover) and can be used in similar ways just as though it were a regular credit card. the cardholder loads it with any amount of money. (for example. credit card collectors seek to collect various embodiments of credit from the now familiar plastic cards to older paper merchant cards. however. and even metal tokens that were 38 . However. Fees and service charges for secured credit cards often exceed those charged for ordinary non-secured credit cards. or people with a long history of delinquency on various forms of debt). up to the predetermined card limit [and then uses the card to make purchases the same way as a typical credit card. After purchasing the card. or more specifically economic (study of money-like objects). This is called a home equity line of credit (HELOC). The main advantage over secured credit cards (see above section) is that you are not required to come up with $500 or more to open an account. after charging off on other credit cards. it carries a credit-card brand (Visa. Collectible credit cards A growing field of numismatics (study of money). MasterCard.Customer attitude towards plastic money logos on them. Prepaid cards can be issued to minors (above 13) since there is no credit line involved. since no credit is offered by the card issuer: the cardholder spends money which has been "stored" via a prior deposit by the card-holder or someone else. Prepaid "credit" cards A prepaid credit card is not a credit card. Many other fees also. secured cards can often be less expensive in total cost than unsecured credit cards.

According to a study conducted by State Bank of India.67 million.Customer attitude towards plastic money accepted as merchant credit cards. which is catering to over 3. The industry. Currently four major bishops are ruling the card empire---Citibank. followed by Bank of Baroda at 0. Stan chart follows way behind with 0. which gives them money on credit. Early credit cards were made of celluloid. smart to secure…. silver. The soiled notes are definitely out. SBI tops the list with 0.3 million credit card customers. Credit Cards have finally arrived in India.5 million cards so far. From just two players in early 80s.8 million card users. then metal and fiber. the industry now houses over 10 major players vying for a major chunk of the card pie.22 million. HSBC and State Bank of India (SBI). Among the nationalized banks. Ch. then paper and are now mostly plastic. 39 . global. while Hongkong Bank has 0. is expected to double by the fiscal 2003. Plastic money in! Carrying cash is no more `a pain in the neck' as consumers are relying more on the `plastic card’. The card industry which is growing at the rate of 20% per annum is flooded with cards ranging from gold. having issued 1. Citibank is the dominant player.the list is endless.28 million cards. Standard Chartered Bank.5 The Rise of Plastic Money Indian consumers have never had it so good.

By the end of the fiscal 2000. Citibank. they are trying to tap the co-branded card market which has vast potential for growth. global card. recently launched a co-branded credit card in partnership with Indian Oil Corporation. the bank is expected to take the secure card to over 36 centers throughout the country. But the catch is that there are not 3.8 million cards today. Thus in a scenario where almost the entire card market is dominated by the phirang banks. is on the verge of an unprecedented boom. aimed at its fixed deposit clients. gold card and corporate card shortly. According to bank officials. one of the late entrants in the card market. SBI's card issue so far is to the tune of 0. in a bid to move to greener pastures. The bank is also planning to launch debit card. which is leading the card empire. This makes the job of selling cards all the more difficult since 40 . Between 1987 and 2000.28 million which is expected to cross the 1 million mark by the fiscal 2002. The bank will be launching this new product at five of its branches at Delhi. why the SBI-GE Capital subsidiary gung-ho about slicing off a major chunk of the card market? Expanding The Card Pie There may be 3. the market has virtually grown to over 3. the country's capital within a fortnight. SBI. The global bigwigs have already established themselves as the `bankable brands' in the metros. The bank's credit card business has grown by 8 per cent over the last two years. has managed to grab over 8 per cent of the market share from the bigwigs like Citibank and Standard Chartered Bank. In a bid to tap the lower middle class segment. SBI is currently sharpening its marketing skills for the launch of `secure card'.Customer attitude towards plastic money The credit card market in India. The card will offer its member’s reward points on every international spend which can be redeemed for free fuel in India.8 million cardholders one person has multiple cards. SBI will become the first bank to tap the lower middle class segment.8 million cards with almost 25-30 % growth in new cardholders. The bank is putting its best foot forward to compete with global card majors like Citibank and Standard Chartered Bank. However. With the launch of `secure card'. which started out in 1981.

and bypassing the direct sales model.28 m 0.57 m 41 .30 m SBI ANZ Bank Others Grindlays of Baroda 0. adopted by the foreign banks. Now. nationalized banks like SBI and BoB are targeting virgin territories.Customer attitude towards plastic money everybody is targeting the same market segment. with an adult population of 7 million. Andhra Pradesh and Orissa including others to widen their client base. These banks are taking their products to smaller townships in Uttar Pradesh. What's more. card ownership is barely 2.800 branch network with an almost 100 per cent geographic coverage covers almost 25% of the bankable population of the country. then it is unlikely to make much headway.5 m Standard Chartere d Bank 0. SBI is perhaps best poised to geographically expand the existing credit card base and drive up penetration.67 m HSBC 0. Reason: Citibank and other foreign issuers like Hongkong Bank and Standard Chartered Bank have already embarked on a massive marketing campaign to boost card usage. Citibank Card Issue (31st March 2000) 1. If SBI ends up targeting the same multiple card customer-bases. Its 8.5 million.22 m 0. SBI is banking heavy on direct mailing exercise aimed at its existing database.26 m 0. multiple card ownership ends up splitting card spends. Thus to move ahead of these phirang banks. Even in a city like Mumbai.

which is tricky for the simple fact that Visa and MasterCard have distinct skews towards metros. will be able to stand the test of the time. HSBC launched `Maha' card `with jyada power' which offer customers 25 % higher credit limit than the limit on any other credit card held by the cardholder.Customer attitude towards plastic money Targeting The Customers Currently. The How's & Wherefores of Plastic Money 42 . Most of the banks are relying on freebees and bundle of services like free accident policy. which is likely to stifle card growth. In order to track the 4 million potential customers presently untouched by the `plastic money' is immense. Only banks. Last month. The only solution is to expand geographical coverage. For present. there is lack of awareness among potential cardholders. which penetrate the Indian countryside. The smart ones like HSBC are offering very high credit limit to tap customers. consumer is definitely the king. special shopping offers. purchase protection and add-ons like additional cards for family members of the cardholder to woo customers.

You weren't planning on it. In fact. You go for a loan. cards that offer rewards in the form of cash back bonuses on your purchases (or in other forms. such as points). After you've figured out which card is right. And since you may well have to depend on your credit rating one day for something important. and you will build the strength of your credit history with every purchase and payment. money and headaches. they can be as individualist as the people who use them. not frivolously. Just as with everything in life. Use your credit card wisely. a short visit is a real eye-opener when you see how much is out there in the way of plastic money. Let's say you stumbled on a fantastic deal for a house. cards with no annual fee. They'll look at your job.the list is almost endless. Do your homework and choose well. To familiarize ourselves with the businesses that provide this credit card screening service. The first thing your potential creditors want to know is whether you are capable of repaying your debt. Fortunately. airline mile cards. there are lots of online credit card clearing house type companies who help you do the research and save you time. It's almost imperative these days to have a credit card and break it out now and then. cards with different rates and terms . 43 . And they will definitely get your credit rating. There are low-to-no interest credit cards. Those who do not will have a low credit rating or none at all. a little homework goes a long way. how much overhead you have. Credit card companies love to rake in the late fees and raise interest rates when you fall behind. but it would be a real opportunity lost if you couldn't take advantage of it. secured credit card. where you live now. and all kinds of factors. In fact. it can get very confusing very fast. This one number alone carries a heavy weight in a creditor's mind. in this fast-becoming-cashless-society. It behooves us all. So when you're trying to find the best one for your individual needs. it could easily make or break the deal of a lifetime.Customer attitude towards plastic money Not all credit cards are created equal. using credit cards wisely makes very good sense.

a balance can demonstrate. Access Control Card Access control card is a plastic card used to gain/control access to premises or enter restricted areas. This section of the Intercard web site is designed to help you understand the various types of plastic card available and their respective uses. and it will be there for you and your family when you really need it.6 PLASTIC CARDS & USES:Card Types and there uses. ID badges.Customer attitude towards plastic money Being aware of these pitfalls is part of being a responsible adult these days. In fact. 44 . Take responsibility for your credit. Usually associated with magnetic or chip cards and proximity cards with or without photo e. Just keep the balance low. You don't need to maintain a zero balance. Building a good credit card payment history is part and parcel of good financial sense. to your benefit that you're able to borrow and pay back on a regular basis.g. CH.

45 . Cards are either the usually 30 micron credit card type cards or alternatively can be ‘pop out’ cards. numbers. Blank Cards Blank card it is totally blank card & cards with no printing usually used in imaging machines. Most debit and some credit cards may also function as cheque guarantee cards (multifunction cards). Cheque guarantee card Cheque guarantee card is a card issued by a bank or building society for the purpose of guaranteeing settlement of cheques to third parties or supporting the encashment of cheques at financial institutions up to a specified value. Charge Card Charge card is a payment card that provides automatic credit within a given invoice date (usually monthly). CR80 Card CR80 Card it state about card size & information it is the description for a standard credit card size (3 3/8" x 2 1/8" x .030). There is an array of machinereadable rectangular bars and spaces arranged in a specific way defined in international standards to represent letters. and other human-readable symbols.Customer attitude towards plastic money Affinity card Affinity card is a form of loyalty card where the co-branding partner is a charity or organisation that benefits financially from card use. Barcode Card Barcode card is a card with printed codes made from vertical lines of different thickness used for fast error free data entry printed somewhere on the face or reverse.

purchases. Combo Card Combo card is a smart card with both "contact" and "contactless" technology on one card.Customer attitude towards plastic money Chip Card Chip card is another name for a smart card.g.also known as town card. Any card where information is transferred to a reader via a series of contact points located on the card is knows as contact car Company Card Company card is a card issued to or by a company for use by an employee for business-related transactions (e. logical access. Eliminates physical contact or insertion into reader terminal while retaining intelligence. and physical access). Eliminates physical contact or insertion into reader terminal while retaining intelligence. Often used in walk-by or gate access applications for mass transit. It is a smart card that transmits and receives data using radio frequencies (RF) technology to communicate with compatible terminal. refers to a plastic card with an embedded integrated circuit. City card City card is a multi-application prepayment card for use within a specific urban area . Often used in walk-by or gate access applications for mass transit. Contactless Smart Card Contactless smart card is a smart card that transmits and receives data using radio frequencies (RF) technology to communicate with compatible terminal. which offers memory and micro processing capabilities.. Contact Smart Card 46 .

Customer attitude towards plastic money Contact smart card is a smart card that requires physical contact with a card reading device to exchange data. Any card where information is transferred to a reader via a series of contact points located on the card. Credit Card Credit card is a term used for a card allowing its owner to spend money with no immediate reimbursement. It is basically use for any credit purpose in terms of money. Debit Card Debit card is a card similar to a credit card, but differs by immediately withdrawing money from an account and transferring it to another account. It replaces cheques (with no delay to give the issuer time to cover it) and does not have a credit line associated. Digital Optical Laser Card Digital optical laser card is a portable card that passively stores information in the form of highdensity marks or bars. Electronic Purse (e-purse) Electronic card is a smart card that contains electronic money. It is sometimes called the electronic wallet or the stored value card (SVC). E-wallet E-wallet cards it is similarly to electronic purse (e-purse) it is a small portable device that contains electronic money. E-wallets are generally used for low-cost transactions. Financial Hologram Card Financial hologram card is a card using a hologram, 30 mil thickness, ISO cards, e.g. MasterCard / Visa and others.

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Customer attitude towards plastic money Financial Cards (Other) Financial cards (other) are typically Debit, Cheque, Charge or ATM cards not using a hologram. Fuel card Fuel card is a special purpose charge card used most by transport drivers to pay for fuel on the road. It is basically use to pay out the fuel bills. Generic Card Generic card is a card that utilizes a base card stock of a pre-designed, centralized image and is not individualized to a specific issuer (or department) within its basic design. It may have an IIN (Issuer Identification Number) that groups the issuer with other organizations (for benefits of scales of volumes) but the users’ card can be subsequently individualized by personalization techniques. Gift Card Gift card is a standard or custom size CR80 card with a stored or prepaid value placed on the card through magnetic striping or bar coding. Usually a retail card initiated at cash desks or checkouts. Health Card Health card is a card used to store information about medical history or insurance coverage. Commonly used in the USA these cards can be of any technology. Hologram card Hologram card is an identification card bearing a hologram as a security measure against counterfeiting.

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Customer attitude towards plastic money Hybrid Cards Hybrid card are cards that support more than one technology, such as an IC (integrated circuit) card with a magnetic stripe. IC Card IC Card is an abbreviation for Integrated Circuit or "chip card". The banking industry prefers the term "IC card" or "ICC". ID card ID card is an abbreviation for identity card: a card that identifies both the bearer and the issuer. All financial transaction cards are I.D. cards. Java Card Java cards it is just like a software basis smart card that supports applications written in JAVA. Key Card Key card is a plastic card used to gain access to premises, usually associated with magnetic stripe and proximity cards. Laser Engraved Cards Laser engraved card are cards produced from a particular group of thermoplastics. These have the properties of high-durability, light weight and flexibility because they are polymers linked together by carbonate groups. Polycarbonate cards are stronger than Polyvinyl Chloride (PVC) cards and thus more expensive. However, for applications where longevity and higher security is pre- requisite e.g. National ID, Passport and Driver’s Licence cards, Polycarbonate cards are ideal. These cards are utilised where the virtually tamper-proof personalisation technique of laser engraving is required. Loyalty Card
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Customer attitude towards plastic money Loyalty card is typically a standard CR80 size card that has off line accounting capabilities e.g. mileage recording or merchandise purchases and often used as a retail frequent user card offering promotional benefits. Magnetic Stripe Card Magnetic card is a card that has a strip of magnetic tape material attached to its surface. This is the standard technology used for bankcards (ATM, credit, and debit cards) and for other applications. Membership Card Membership card is just giving identity to an individual an identity is usually a club member card for ID purpose. Memory Card Memory card is a type of smart card. Also known as a synchronous card, it features 256 bits or 32-byte memory and is suitable for use as a token or identification card. It is controlled only by fixed logic rather than by a microprocessor.

Microprocessor Card Microprocessor card is a type of smart card, also known as an asynchronous card. Features 1 kilobyte to 64 Kbytes of memory and is suitable for portable or confidential files, identification, tokens, electronic purse or any combination of uses. Mifare Card Mifare card it give standarised to the card & it is a proprietary contactless smart card standard, equivalent to ISO 14443 Type A.

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51 . oil/gas. PETG PETG formal name is polyethylene terephthalate-glycol-modified is extremely clear. PCMCIA Card PCMCIA Card is an abbreviation for Personal Computer Memory Card International Association: it is not considered to be a smart card. and (b) the connection means is through an edge connector.g. PETG does not contain a UV inhibitor. Non-magnetic Card Non magnetic card &it is a card without a magnetic stripe it contain any information in a view form e. Optical Card Optical card is a card with information recorded on an optical memory stripe. as. similar to compact disks. not via the standard surface-contact method. transport. telecom. whilst this card type contains semiconductor chips.Customer attitude towards plastic money Multi-application Smart Card Multi-application card is a microprocessor smart card that can handle a variety of applications typically with lots of memory and computing power – whilst maintaining separate security conditions. Other Secure Card Other secure card are just give for the basis security & are usually retail. it is (a) physically thicker than a smart card. and pay TV cards. (Polycarbonate) . ID cards.

These have the properties of high-durability. It is basically use to prepare a plastic card. satellite TV. for applications where longevity and higher security is 52 . Pay TV Card Pay TV Card is usually a chip card subscribing to a television service it is just connecting to satellite for view of television. Payment Card Payment card is a card that is used as an identifier when used to transact full or part payment a bill. However. Plastic card Plastic card is a generic description of all payment cards including credit. light weight and flexibility because they are polymers linked together by carbonate groups. It enables the payees’ details to be swiftly recorded automatically and credit lodged against the account. It is just like carrying money in face of plastic card Polycarbonate Cards Polycarbonate card are cards produced from a particular group of thermoplastics. The primary material used for typical plastic cards. Polycarbonate cards are stronger than Polyvinyl Chloride (PVC) cards and thus more expensive. debit and cheque guarantee. PVC card PVC Abbreviation is Polyvinyl Chloride.Customer attitude towards plastic money Photo ID card Photo ID card is an identification card bearing a photographic image of the cardholder. The image can be an actual photograph or one captured wholly electronically. Phone Card Phone card is a stored value card that allows the user to access telephone networks via a PIN number which is usually covered by a scratch-off panel for security. E.g.

Proximity Card Proximity card is typically a contact less card whose presence and data can be sensed by an interface device not in physical contact with the card and used for access control applications. Promotional Card Promotional card is typically a card offering special benefits to users e. 53 .requisite e. which allows it to communicate with an RF external antenna. Passport and Driver’s Licence cards. Retailer (Store) Card Retailer (store) card it is given by retail group.Customer attitude towards plastic money pre. Not all such cards show the identity of the bearer (e. Protected Memory Card Protected memory card is a smart card that requires a secret code or PIN number to be entered before the data can be sent/received from the chip. phone cards).g. A proximity card in which the coupling between the card and the interface device is by radio. National ID. Prepaid Card Prepaid card is a card paid for at Point of Sale and permits the holder to buy goods or services up to the prepaid value.g. Polycarbonate cards are ideal. Radio Frequency Card (RFlD) Radio Frequency card (RFID). Embedded in the card is a metallic antenna coil. It is a proprietary card used and issued by a retailer or retailing group. These cards are utilized where the virtually tamper-proof personalization technique of laser engraving is required. discounts or rewards.g.

Customer attitude towards plastic money Scratch Card Scratch card is mainly used in mobile refilling or any price reveling it & it is a card that is produced with special ink that can be scratched away to reveal a number or message. A smart card is a plastic card with an embedded microchip that may be used to store information about the cardholder or record card transactions as they occur. SIM card SIM card is an abbreviation for Subscriber Identification Module: a smart card that connects to a GSM phone and establishes the user’s identity. other secure cards etc. Protected Memory Card or Microprocessor Card.g. This is a credit card or SIM card sized plastic card with an embedded microcircuit that contains either a: Memory Card. Secure Card Secure cards it is use for security are cards with an intrinsic value e. Store card Stored card is a financial transaction card associated with a retailer or group of retail stores that can be used only for purchases from the retailers concerned. Plastic credit sized card that contains one or more semiconductor chips. Smart Card/Contact Smart Card Smart card/Contact smart card also called a "chip" card or IC card. Single-application Smart Card Single-application smart card is a smart card issued to a single organization for a singular purpose. financial. Stored Value Card 54 .

no fraud can take place in this 55 . CH. electronic purse. and require a signature.g. This types of card maybe a prepaid card. a credit card. loyalty points or credit for canteen meals with each 'purchase' amount deducted from the card. 7. or one that adds the cost of the call to a standard bill. prepaid card that is loaded with a certain amount of money/value e. a stolen card can be cancelled.g. Thus. Telephone Card Telephone Card is a card that can be utilized for the payment of telephone calls.Customer attitude towards plastic money Stored Value Card – is a financial card e. whereupon access to the number allows easy fraud. SAFETY MEASURES & PRECAUTIONS PLASTIC CARDS SAFETY MEASURES Credit card security relies on the physical security of the plastic card as well as the privacy of the Some merchants will accept a credit card number for in-store purchases. and if this is done quickly. but many require the card itself to be present. cash card.

The transaction is released once the transaction has been confirmed by the cardholder pushing his/her pin code during the call. Each transaction is authenticated through a call to the user mobile phone. as well as the PIN. which requires that the thief have access to the card. Other states. So customers should be wary of these offers that usually contain some traps. Interest charges vary widely from card issuer to card issuer. For internet purchases. but often there are additional measures. called over limit fees Returned cheque fees or payment processing fees (e. 24. The PCI DSS is the security standard issued by The PCI SSC (Payment Card Industry Security Standards Council). An additional feature to secure the credit card transaction and prohibit the use of a lost credit card is the MobiClear solution. whereas regular rates can be as high as 40 percent. Fees charged to customers the major fees are for:• • Late payments or overdue payments Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake). with some states such as South Dakota. 56 • • . there is no federal limit on the interest or late fees credit card issuers can charge. there is sometimes the same level of security as for mail order (number only) hence requiring only that the fraudster take care about collecting the goods. The teaser rate no longer applies if the customer doesn't pay his bills on time. six months). the interest rates are set by the states. for example Delaware. This data security standard is used by acquiring banks to impose cardholder data security measures upon their merchants. having no ceiling on interest rates and fees. inviting some banks to establish their credit card operations there.99%) that applies retroactively. The main one is to require a security PIN with the card. In the U. Often. phone payment fee) Cash advances and convenience cheques (often 3% of the amount). say.S. Interest on outstanding balances. have very weak usury laws.Customer attitude towards plastic money way. there are "teaser" rates in effect for initial periods of time (as low as zero percent for. and is replaced by a penalty interest rate (for example.g.

penalty and surcharge. • Exchange Rate Loading Fees (May not even appear on your statement!). sometimes a percentage of the credit limit. The terms and conditions of the credit card agreement must be carefully viewed and understood so that a clear insight can be achieved. Membership fees (annual or monthly). This can also be done to maintain a smooth flow of business transactions and ensuring one's credit stability and visibility in the plastic money market. Tips for prospective or existing credit card holders: A prospective or existing credit card holder must observe carefulness while applying or owning a credit card. A few financial institutions do not charge a fee for this. The credit card repayments must be made before the due date to avoid attraction of late fee. 57 .Customer attitude towards plastic money • Transactions in a foreign currency (as much as 3% of the amount). This will help a credit card holder to make the best use of the plastic money.

expiration dates. and the telephone numbers of each card issuer so you can report a loss quickly. Exposure to electronic devices and gadgets.before disposing of them. You will notice if it is missing. • Carry only those cards that you anticipate you'll need. • Keep the Card in a prominent place in your wallet.in a safe place separate from your cards . Never put your account number on the outside of an envelope or on a postcard. • • • • • • • Keep a record . Report mistakes or discrepancies as soon as possible to the special address listed on your statement for inquiries.of your account numbers.Customer attitude towards plastic money Precautions To Avoid: • • • • Bending the Card.cutting through the account number . Open monthly statements promptly and compare them with your receipts. Cut up old cards . This will ensure that the benefits of membership are yours and yours alone. Under the FCBA (credit cards) and the EFTA (ATM or debit cards). 58 . Direct exposure to sunlight. Tear up carbons and save your receipts to check against your monthly statements. Draw a line through blank spaces on charge or debit slips above the total so the amount cannot be changed. the card issuer must investigate errors reported to them within 60 days of the date your statement was mailed to you. Be cautious about disclosing your account number over the phone unless you know you're dealing with a reputable company. Don't sign a blank charge or debit slip. To Do: • Please sign on the signature panel on the reverse of the Card immediately with a nonerasable ball-point pen (preferably in black ink).

Non-receipt of dues of one-card blocks future transactions on any other card(s) held of the same card-issuing bank. The Card is hot listed. 59 . The card has crossed its expiration date. has been scratched or exposed to continuous heat/direct sunlight or magnetic field-like card kept near a TV set / other electronic appliances. • • • The magnetic stripe on the reverse of the card is damaged i.Customer attitude towards plastic money Reasons credit card being rejected at retail outlet: • One may have exceeded the borrowing limit or defaulted (constantly) on minimum payment due. Systems or technology failures have in rare instances also led to non acceptance of cards when swiped through Electronics.e.

8 CREDIT CARD & DEBIT CARD Credit Card Credit cards in India are gaining ground. EMV chip 3. The concept of credit card was used in 1950 with the launch of charge cards in USA by Diners Club and American Express. retail stores and other businesses issue these. A number of banks in India are encouraging people to use credit card. Card brand logo 6. Credit card number 5. Issuing bank logo 2. Workings of credit caard An example of the front of a typical credit card: 1. Credit cards are financial instruments. which can be used more than once to borrow money or buy products and services on credit. Credit card in India became popular with the introduction of foreign banks in the country. Basically banks. Hologram 4.Customer attitude towards plastic money CH. Cardholder's name An example of the reverse side of a typical credit card: 60 . Credit card however became more popular with use of magnetic strip in 1970. Expiry Date 7.

When a purchase is made. or may choose to pay a higher amount up to the entire amount owed. by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). and the total amount owed. after which cardholders can use it to make purchases at merchants accepting that card. Some financial institutions can arrange for automatic payments to be 61 . The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Also. the cardholder must pay a defined minimum proportion of the bill by a due date. Each month. the cardholder may dispute any charges that he or she thinks are incorrect (see Fair Credit Billing Act for details of the US regulations). the credit card user agrees to pay the card issuer. such as the security code printed on the back of the card. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank.Customer attitude towards plastic money 1. These will typically involve the cardholder providing additional information. many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet.Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds. Magnetic Stripe 2. After receiving the statement. allowing the verification to happen at time of purchase. or the address of the cardholder. but is more technically an EMV card. Card Security Code Credit cards are issued after an account has been approved by the credit provider. Otherwise. the latter system is in the United Kingdom and Ireland commonly known as Chip and PIN. Data from the card is obtained from a magnetic stripe or chip on the card. the credit card user is sent a statement indicating the purchases undertaken with the card. Other variations of verification systems are used by ecommerce merchants to determine if the user's account is valid and able to accept the charge. The cardholder indicates his/her consent to pay. Signature Strip 3. any outstanding fees. known as a 'Card/Cardholder Not Present' (CNP) transaction.

You can use a debit card to get cash from ATM machines or have it swiped like a credit card at shops or restaurants or swipe it through a pay phone to make a call. Let's assume you have a budget of $2000 for your trip. Decide how you're comfortable splitting that into the way you'll use it. Making a Travel Budget with a Debit Card Naturally. Thus. you can't rely on your debit card for all your international transactions . the transaction debits (withdraws) the amount of the transaction from your checking account. So a debit card relieves you of having to withdraw lump sums of money from your bank account or of carrying your cheque book around every time you go shopping or decide to eat out. usually on the same day. $500 in cash and $1000 left in your 62 . $500 in traveler's checks. getting the price right and then trying to give him/her plastic! Remote hostels and many restaurants in third world countries don't accept credit cards (which is how debit cards are viewed in the business world). you'll need to make budget plans before you leave home so that you have traveler's checks and cash and some money in your checking account for use on your debit card. Workings of debit card When you use a debit card. DEBIT-CARDS The difference between a credit card and a debit card is that in the case of the latter. A debit card differs from a credit card in that a debit card is tied directly to your checking account and the amount of money you can spend with it is limited to the amount of money you have in the bank. thus avoiding late payment altogether as long as the cardholder has sufficient funds.Customer attitude towards plastic money deducted from the user's bank accounts.imagine haggling with a street vendor. the payment is made against the balance in your bank account.

Set up an international snail mail address before you leave home so your bank can send you a new card if it does get lost or stolen. sign the back. leave deposit slips with him so that if you lose all your money abroad.merchants may want to compare your face and your signatures to protect themselves from fraud. in order to lessen the chances of someone else being able to guess your PIN number if they come into possession of your card. and ask for a debit card.that's $1000 on your debit card.. consider setting up emergency precautions before you leave home. keep that separate from your card. Look for a bank that doesn't charge checking account fees. If someone. How to Get a Debit Card Chances are you were automatically offered a debit card when you opened your checking account.. Don't choose an obvious number. If your debit card (your checking account) is almost empty. is willing to loan you money. like your birthday. Write down your bank's number before you leave home and keep it in a couple of places . if you have to write it down. 63 . call your bank before someone else spends your money.Customer attitude towards plastic money checking account.your journal. you can dial for dollars (using your debit card) and he can get some money into your account. It takes a few days to two weeks to get a debit card after you order it. How to Choose a Debit Card PIN Number Your debit card comes with a PIN (personal identification number) which can be changed to a number you can easily remember. Memorize it. have photo id with your signature handy when you use the card . your guidebook. like Dad. If you don't have a checking account. If that $2000 represents your entire cash portfolio. for example -. go open one now. ask him to tell the bank to "memo post" the deposit so that the cash is immediately available and your debit card is quickly back in business. If your card is lost or stolen. If You Lose Your Debit Card. When the card arrives.

including plane tickets. India has entered the stage of credit card system and credit cards are gaining increasing relevance to facilitate industrial. While ancient society was confronted with the problems of adjusting mutually satisfactory rates and basis of exchange. would settle financial transactions instantly. with the help of computers. More than $2 is too much -. electronics and telecommunications. You can't use a debit card just like a credit card when renting a car . History of Credit Cards Our society was once upon a time functioning without money. future society. which offer a certain amount of insurance in case you have a fender bender. it is again likely to become moneyless. Most fees are under $5 -. the amount is determined by the ATM owner. The difference will be that in future coins. Debts settled by one-third cash and two-thirds bill of exchange paper money followed only in the 17th century.look for another ATM machine. currency notes. telephone and other modern means of communications. Credit was first used in Assyria. The first advertisement for credit was placed in 1730 by Christopher Thornton who offered 64 .Customer attitude towards plastic money When to Use Your Debit Card Debit cards are handy when making a long distance room reservation or any internet reservation..a notice on the ATM machine will tell you what the fee is.was established in the 14th century. The Bill of Exchange – the forerunner of bank notes . Babylon and Egypt 3. cheques. etc. credit cards. About Debit Card Fees and Overseas Transaction Fees International ATM machines will charge a fee when you use your debit card.000 years ago. commercial and agricultural transactions.the companies require a major credit card. Money as a medium of exchange will serve its function. will be dispensed with in favor of records.

New York. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. the credit card became a part of the information age. Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants.Customer attitude towards plastic money furnfvbr6d’iture that could be paid off weekly. From the 18th century until the early part of the 20th. The spending of card-holders who have defaulted on payments or who are over their credit limit can be restricted until the balances are cleared. The origins of the bank credit card have been traced to John C. Biggins launched a credit plan called Charge-It. Consumer Credit Act 1974 of 65 . With the magnetic strip in 1970. pay later” system – was introduced in USA. Diners Club and American Express launched their charge cards in USA. In 1951. a consumer credit specialist at the Flatbush National Bank of Brooklyn. Definition of credit card A credit card is a credit-token within the meaning of section 14(1). Biggins. The program featured a form of scrip that was accepted by local merchants for small purchases. they were called “tallymen” because they kept a record of tally of what people had brought on a wooden stick. It could only be used in shops which issued it. tallymen sold clothes in return for small weekly payments. and this is where plastic cards have proved their worth. Cash in the form of currency notes and coins makes up just one form of the payment system. In the 1920s shopper’s plate – “buy now. In 1950. In 1946. It allows the card issuers to limit the sum of money the card-holders wish to spend. the first ‘plastic money’. Concept of credit card Progress in civilization in its turn has brought out radical changes in the manner of trading. The need for something intrinsically useful and easily applicable in everyday dealing is clearly felt. Development in banking while also giving inputs to the further development of cash brought about a second phase in payment namely paper instructions such as cheques and credit transfers. The requirement for greater flexibility and convenience has led to electronic payments.

he will supply. goods and services (whether or not deducting any discount or commission). stamp. goods and services (or any of them) on credit. the scheme provided large scope for sale and increased turnover with assured and prompt payment. Such credit is normally made available for a period of 30 to 45 days. If a purchase exceeded the merchant’s floor limit. The VISA and the MASTER the largest credit cards today appeared in market in 1966. These two international cards are very popular and are accepted and honoured all over the world in 170 countries. That were. in return for payment to him by the individual. Merchants signed agreements to accept the cards. These two independent card companies led to latest 66 . That on the production of it (whether or not some other action is also required). Franklin National Bank’s Credit Card programme was copied by hundreds of other banks in the late 1950s and early 1960s. Unsolicited credit cards were sent to prospective card-holders who were not subject to credit screening prior to being sent a card. the Franklin National Bank in New York issued the first modern credit card. In 1951. in 1966. the card-holder presented the card to the merchant. When a purchase was made. cash. who would copy the information on the merchant’s account at Franklin Bank in the amount of the transactions. or b. cheque. The Bank of America issued Bank America in 1958 and eight years later. coupon. the banks comprising the Western State Bank Card Association issued the Master Charge Card. less the discount rate. the merchant was required to call the bank for approval. on the production of it to third party (whether or not any other action is also required).Customer attitude towards plastic money the UK which defines a credit-token as a card. voucher. form booklet or other document or thing given to an individual by a person carrying on a consumer credit business. This is turn helps earn income by way of commission from its merchant establishments. Bank America and Master charge card became the focal points for the eventual groupings of all bank cards throughout the world. In very simple words credit card can be termed as an unsecured personal loan offered to customers by the banks where the card-holder could purchase goods and services from authorised merchant or merchant establishments (MEs) of the bank up to a fixed limit on credit. who undertakes:a. the third party supplies cash.

Customer attitude towards plastic money innovations in the credit card business. The seven million Indian credit card industry has been growing over 25 per cent3 annually and has now more than 30 banks chasing customers with their cards. obviously. The card industry.3 million cards (some. India is generating more credit card spenders than spending places. which is catering to over 3. smart to secure…the list is endless. which started out in 1981. the industry now houses over 10 major players vying for a major chunk of the card pie. Now the credit card system has become universally popular throughout the world including the Communist countries.000 on both the Visa and MasterCard loops. silver. the number of merchant establishments which accept cards is growing selectively sluggish. global. At the end of 1995 and 1980 a million cards were used in the world. SBI tops the list with 0.8 million1 card users.000–80. As opposed to that. having issued 1. four major bishops are ruling the card empire . there are 2. is expected to double by the fiscal 2003. Credit cards in India Credit cards have finally arrived in India.5 million cards so far.67 million. Still. the market has virtually grown to over 3. HSBC and State Bank of India (SBI). Standard Chartered Bank follows way behind with 0. Standard Chartered Bank. Currently. credit cards in India have made business sense only to a few. followed by Bank of Baroda at 0. While card-base and appends are growing at a spiffy 25-30 per cent2 annually. have more than one) and the numbers are growing very strongly. which is growing at the rate of 20 per cent per annum is flooded with cards ranging from gold.5 million card-holders and 3.8 million cards with almost 25-30 per cent growth in new card-holders. and now stands at 100.28 million cards.22 million. 67 . Citibank is the dominant player.000 a couple of years ago. The industry. From just two payments in the early ‘80s. is on the verge of an unprecedented boom. The figure was put at 75. Among the nationlaised banks. The credit card market in India.3 million credit card customers. The total number of credit card users in India is currently in excess of 80 lakh and now more than 30 banks are chasing customers with their cards. According to a study conducted by State Bank of India. while Hongkong Bank has 0. Between 1987 and 2000.Citibank.

the interest paid by the card-holder on the ‘credit’ utilized by him is what makes the business of credit cards profitable from the point of view of the bank issuing the card. while another 30 per cent use the card as a charge card without using the revolving facility cards are expected to account for 33 per cent of all purchases by 2000 and 43 per cent by 2005. Nearly 45-50 per cent of the card-holders are estimated to be inactive. Citizens have always been very skeptical about use of credit cards for online purchases fearing the stealing of credit card information and their use on the Internet lack of “signature” was the principal reason for fear. This is very akin to the overdraft facility offered by banks to their account holders.the transmission of payments and the granting of credit. This fear has been one of the reasons for the slow growth of e-commerce and perhaps also contributed to some of the dotcom failures also. in its true sense. The credit card embodies two essential aspects of the basic banking function . Credit card frauds In a recent case of credit card frauds busted by the Chennai Police. In the initial days of e-commerce. but it is only 20 per cent of the card base. Therefore.Customer attitude towards plastic money “The annual growth rate is good. manager. In fact. there were incidents where “pseudo sites” were created to gather credit card information in exchange for some service. These were used in preparing duplicate credit cards through which purchases were made from shops in Chennai. A credit card holder does not necessarily have to settle his entire account at the end of the month for he has the option to make partial payment in subsequent months. that is generating revenue. The incident highlights the risks that are inherent in the use of credit cards.” says Roopan Asthana. Many of the e-commerce sites used 68 . Card Products Division of HSBC. when the card-holder makes the full payment at the end of the month he is said to be using his credit card as a ‘charge card’. it was found that the credit card particulars had been stolen from many hotels in several foreign cities such as Singapore. a ‘credit’ card must offer the opinion of revolving credit. Incidentally.

So the repaid growth of credit holders will be going up. preferential treatment at airports. discount offers and the like. There is harassment from the clutches of bankers also. besides providing the facility of ‘buy now and pay later’. This led the card-holders into a debt. The motto of credit cards. As a result of some of these measures.Customer attitude towards plastic money to save the credit card details on the web server which were hacked into and information stolen. First. the Chennai chapter of the Credit Card Users Association was launched on April 25. Some banks issued credit cards to people without verifying their credit worthiness. Lured by these benefits. middle class and upper class people are increasingly becoming interested in card 69 . Some of the e-commerce sites today take a precaution to ensure that the billing address on the card and the destination of goods purchased are same to ensure that there is no third party who is benefiting from the purchase. the e-commerce sites use various measures to prevent misuse of credit card data. The problems that arise to the credit card users are many. hotels. 20074. also provides a range of benefits like free insurance cover . The credit card information also is sent directly to the payment gateway and the e-commerce site avoids storing of the data on its server. One of the precautions that Indian e-commerce site owners are adopting in such cases is to verify from the destination address the genuineness of the transaction and the relationship between the credit card holder and beneficiary It can therefore be said that the biggest risk for credit card frauds online is not from online security problems but from the possibility of the credit card data being offline in a hotel or a shop where the user parts with the card for sometime. exchange of credit card data online is saved even though the authorization itself is done on the basis of information otherwise found on the face of a credit card. there is encryption of data between the client’s browser and the e-commerce site. Considering all these things. restaurants. the unencrypted flow of credit card information was collected by an eavesdropper. Sometimes. It is organising credit card surrender campaign for such card-holders. hospitals and other merchant establishments. At present. All these are now things of the past. This sometimes creates an embarrassment when a person is trying to send a gift to another person.

The card-holder feels confident of his status and prestige. J. multiplexes. online shopping stores and shopping complexes have contributed to the growth of the use of plastic cards. electricity. no one wants to be bothered by the presence of huge cash in his or her wallet and the Indians are no exceptions. The introduction of credit card facilities to pay for mobile. allowing them to invest in technology and push the card business strongly. The Best credit cards in India are usually meant for specific user group such as women. Best credit cards (India): In context of the Indian market. In the present day world. Sheebarani The growth and popularity of plastic money in India has been phenomenal in the last few years. The benefits of plastic money have offered unmatched ways to create an equilibrium and offer an amicable solution when it comes to purchases and the inability to possess or carry cash. Credit Cards in India India has come out of self-binding shackles to look "young" again and the enthusiasm shared by the young work force of the country is driving the economy like never-before. students and small 70 . HSBC and Standard Chartered to name a few. The financial health of Indian banks is also expected to improve. HDFC. The modern day Indian customers find it more easy to make physical payment (credit card payments) rather than carrying too much cash.Customer attitude towards plastic money membership. The unprecedented growth in the number of credit card users has stimulated the Indian economy by a significant extent. the leading credit card services providers are ICICI. These financial institutions have tried their hands on ensuring value-addition while offering customer-friendly credit card deals. The Indian economy is booming with a refreshing youthfulness in its march to success. movie tickets and other related transactions have also contributed to the growth of plastic money in the country. It will not be wrong to say that such a scenario in context of the Indian market is not driven by style statement and is driven more by needs. The arrival of malls.

2007. 71 . The trends were as favorable as ever in the financial years. FY 2006-07 and 2007-08 and the same is likely to continue in the coming financial years.Customer attitude towards plastic money business owners. It has been also revealed that the increasing consumerism in the country has led to a two-fold increase in the number of credit card transactions from FY 2003-04 to 2005-06. These cards are offered to the prospective customers with appealing deals. Statistics have clearly revealed that the number of credit card holders in India are close to 22 million as on January.

American Express.An association of card-issuing banks such as Visa. Discover. American Express and Discover were previously the only card-issuing banks for their respective brands. card-issuing banks.Parties involved in trnsactions Cardholder: . this is no longer the case.This could refer to the acquiring bank or the independent sales organization. Credit Card association:. CH 9. Independent sales organization: .The individual or business accepting credit card payments for products or services sold to the cardholder Acquiring bank: . This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. 72 .The financial institution or other organization that issued the credit card to the cardholder. the consumer Card-issuing bank: . Merchant: .The holder of the card used to make a purchase. and acquiring banks. etc. but in general is the organization that the merchant deals with.Resellers (to merchants) of the services of the acquiring bank.The financial institution accepting payment for the products or services on behalf of the merchant. but as of 2007.Customer attitude towards plastic money . that set transaction terms for merchants. Merchant account: . MasterCard.

Nova.The system that implements the mechanics of the electronic transactions. Along with most major 73 . Credit cards have also become the primary source of unsecured open-end revolving credit. Affinity partner:. and they have largely replaced the installment-purchase plans that were important to the sales volume at many retail stores in earlier decades. and one company may operate multiple networks. In modern commerce. Paymentech.Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution. 10 Customer attitude towards plastic money Introduction A notable change in consumer financial services over the past few decades has been the growth of the use of credit cards. Transaction processing networks include: Card net. and get paid a fee or a percentage of the balance for each card issued using their name. making retail purchases by telephone or over the Internet). Examples of typical affinity partners are sports teams. Nabanco. CH. From modest origins in the 1950s as a convenient way for the relatively well-to-do to settle restaurant and department store purchases without carrying cash. NDC Atlanta. credit cards have become a ubiquitous financial product held by households in all economic strata. Vital. Omaha. May be operated by an independent company. universities and charities. both for payments and as sources of revolving credit. Concord EFSnet. or perhaps impossible (for example. credit cards (along with debit cards) serve as a payment device in lieu of cash or checks for millions of routine purchases as well as for many transactions that would otherwise be inconvenient.Customer attitude towards plastic money Transaction network: . and Visa Net.

as debt and personal bankruptcy levels have increased over the decades and media reports of confused consumers have multiplied. Although one can usually find anecdotes to illustrate a point—consumers who are unaware of the costs of credit cards. But they have also raised concerns in two areas: (1) whether consumers fully understand the costs and implications of using credit cards (the consumer information–consumer understanding concern) and (2) whether credit cards have encouraged widespread over indebtedness. It then moves to an exploration of the consumer information–consumer understanding issue. Statistically representative surveys can contribute to a more complete understanding of consumers’ experiences. Taken together. the Credit Research Center in 74 . The two issues are related. such surveys can serve as a status report on the use of credit cards some fifty years after their introduction. with emphasis on consumers’ attitudes toward credit cards and their knowledge of costs. for instance. particularly among those least able to pay (the indebtedness–financial distress concern). It begins with an examination of long-term trends in consumer indebtedness. and the rise of plastic cards for payments and open-end credit is no exception. because one result of lack of understanding may be over indebtedness. or consumers who overspend because of the wide availability of credit— such examples can never lead to a definitive understanding of issues having broad social or economic impact. Both issues remain prominent in public discourse.Customer attitude towards plastic money societal changes come questions about whether the trend is beneficial or detrimental (or somewhere in between). with attention to the growth of card based credit. This article brings to the discussion some survey evidence on the use of credit cards in the United States. Credit cards certainly are widely used and accepted by the public. Consumers’ Attitudes toward Credit Cards To explore consumers’ attitudes toward and understanding of credit cards. as well as to gather information about card use.

Nonetheless. especially among holders of banktype cards (table 3). unfavorable views among cardholders have increased over the decades. much different from 1977. Opinions among all families that credit card use is ‘‘good’’ register a bit higher in 2000 (33 percent) than in 1970 (28 percent) but a bit lower than in 1977 (39 percent). when a considerably larger proportion had a favorable opinion. General Attitudes Respondents—both those who used credit cards and those who did not—were first asked their broad feelings about credit cards. the question was identical to the question asked in nationwide Surveys of Consumer Finances in 1970 and again in 1977: ‘‘People have different opinions about credit cards. holders of bank-type cards are about equally divided in their opinions that credit card use is good or bad. Interviewing was done by the Survey Research Center of the University of Michigan as part of its monthly Surveys of Consumers. So that attitude changes could be tracked over time.Customer attitude towards plastic money January 2000 sponsored interviews of nearly 500 households representative of households in the forty-eight contiguous states. negative attitudes among cardholders are much more common in 2000 (42 percent) than they were in 1977 (14 percent). Consumers’ opinions about credit cards also vary depending on their use of and experience with cards. views among holders of banktype cards were more favorable than those among the population generally. would you say that using credit cards is a good thing or a bad thing?’’ Overall opinions about credit cards are somewhat more negative and polarized in 2000 than they were a generation ago. In 2000. The view that card use is ‘‘bad’’ is stronger in 2000 than in either of the earlier years. This finding is interesting because card use is also much greater in 2000. In all three surveys. Less enthusiastic viewpoints are somewhat more common among those who use credit cards as credit devices rather than primarily as substitutes for cash 75 . Overall.

Attitudes toward Card Features. cards are viewed less positively by those who have three or more cards. have no balance or a low balance outstanding. the 2000 survey also asked questions about specific features of credit cards and about card issuers and users. Although data 76 .Customer attitude towards plastic money or checks. Specifically. but the relationship is not as strong as that associated with the variables related to the use of cards.500. and Other Users To examine why card users might have the general attitudes about credit cards that they do. The questions took the form of statements with which respondents could agree or disagree. or have not received a collection views call have more in favorable table). hardly ever pay their outstanding balance in full. Card Issuers. those who have fewer cards. generally pay more than the minimum. have an outstanding balance of more than $1. (not shown the Demographic measures also appear to be related to attitudes toward credit cards. have transferred a balance between cards. or have received a collection call. hardly ever pay more than the monthly minimum. Conversely.

in contrast. Most holders of bank-type credit cards (more than 80 percent) believe that the annual percentage rates charged on outstanding balances are too high (table 4). Consumers’ feelings about experiences with credit cards in general are even more negative than their feelings about specific practices. but from the 2000 survey results it seems likely that as card use has become more common. Approximately nine in ten holders of bank-type credit cards said that they are satisfied with their dealings with card companies. Rather. that consumers are confused about some practices. not of card issuers. negative opinions about card use may have increased as a result of perceptions about ‘‘the other guy. Almost seven in ten trust that their own card companies would keep their personal 77 . and that credit users have difficulty getting out of debt.Customer attitude towards plastic money from earlier years are not available for comparison. are much more positive. responses to these questions reveal an interesting divergence of views that might help explain why overall attitudes have deteriorated. Consumers in 2000 seem to be concerned about specific practices of credit card issuers. Without data from earlier periods and questions designed specifically to address this hypothesis. Somewhat over half said that issuers should not be allowed to market cards to college students. and that it is easy to get another card if they are not treated fairly. In contrast. Moreover. relatively few express concern about billing accuracy. Holders of bank-type credit cards in 2000 believe that too much credit is available. The responses suggest that the current negativity may have arisen in part from an individual’s perceptions of other consumers’ difficulties rather than from the individual’s own experiences. they appear to believe that consumers bring on themselves many of the problems associated with credit cards: Ninety percent agree to some extent that overspending is the fault of consumers. one cannot be certain. consumers’ opinions about their own relations with their current card issuers are much more favorable than their opinions about the relations of consumers in general. They also express concern over privacy practices.’’ Views about personal experiences with credit cards. that their card companies treat them fairly. Survey evidence does not suggest that increasingly negative views of credit cards have arisen from adverse personal experiences.

’’ Despite expressed concerns about some practices and experiences. substantially more than the proportion believing that card companies in general show enough concern about protecting privacy (just under five in ten).Customer attitude towards plastic money information confidential. but other people cannot. About six in ten disagreed that consumers would be better off without 78 . Cardholders’ opinions about their own experiences are almost the reverse of their views about consumers’ experiences in general. consumers appear to be satisfied with the credit card market in general. Approximately nine in ten holders of banktype credit cards said that credit cards provide a useful service to consumers. and about seven in ten said that most people are satisfied in their dealings with card companies. suggesting considerable concern over the behavior of others and possibly a belief that ‘‘I can handle credit cards.

avoid teaser rates altogether by ignoring the mailings that promote them. Exactness in such a calculation assumes. They could. is a multifaceted set of attitudes about credit cards.’’ On balance. suggesting that actual problems with credit cards are not nearly as widespread as consumers imagine them to be when they think about the population of largely unknown ‘‘others. Many holders of bank-type cards in 2000 said that it would be helpful to include on their billing statement information about the length of time it would take to pay off the balance if only the minimum payment were made each month. It seems that credit and creditors are not viewed completely favorably. however. that the consumer does not use the card during the repayment period and that the balance declines on schedule. They believe that finance percentage rates on outstanding balances are too high. they imagine possibly negative consequences. holders of bank-type credit cards in 79 . for example. When the focus shifts to more-personal experience. they view the outcome much more favorably. excessive credit use. but that most users are favorably inclined. consequently. What emerges from these responses to opinion questioning.Customer attitude towards plastic money cards. of course. Many respondents also reported that ‘‘teaser rates’’ are confusing. the calculation would be difficult or impossible. of course. Multifaceted opinions are not especially surprising. this survey finding may reflect concerns among consumers that card issuers have complicated promotions sufficiently that it is difficult to understand and accept advantageous offers when they are made. Survey respondents probably did not consider the implications and complexity of the calculations but were simply acknowledging a desire for a practical measure of the burden they are incurring. whose behavior is already suspect. even by users of the service. are suspicious of how personal information is used. If the balance were to fluctuate substantially. These results are similar to those from a 1977 survey of users of nonrevolving credit (memo items in table 4). When they imagine ‘‘the other guy’’ in contact with card issuers. in sum. and have relatively little confidence in other individuals who use credit cards. given that consumers overall seem to think that credit cards are both good and bad. and most likely meaningless (discussed further later).

Equity Broking. which was still in the initial stages of growth and development. The foundation of the bank was laid down under an Act of Parliament. and registered path-breaking success. In January 1992. After the transfer of its ownership. in July 1964. The following year. to offer a broad range of financial services. Client Asset Management and Depository Services. and less-confusing. CASE STUDY BANK PROFILE The Industrial Development Bank of India Limited. through which the institutes engaged in financing.. information about payments and rates would be useful. with innovative Deep Discount Bonds. The main aim behind the setting up of IDBI was to provide credit and other facilities for the Indian industry. it set up the IDBI Capital Market Services Ltd. the ownership of IDBI was transferred to Government of India. promoting and developing industry were to be coordinated. consumers believe that additional. including Bond Trading. now more popularly known as IDBI Bank. In February 1976. Finally. as its wholly-owned subsidiary. these opinions seem to mirror earlier views about installment credit.Customer attitude towards plastic money 2000 believe that credit cards are useful and that consumers are better off with them than without them—despite concerns over the inability of ‘‘other (unknown) consumers’’ to exercise self-discipline and avoid overuse. was established as a wholly-owned subsidiary of Reserve Bank of India. 80 . IDBI accessed domestic retail debt market for the first time. IDBI became the main institution.

Today. REPORT FROM IDBI BANK QUESTIONNAIRE Q. (NSDL) and the Stock Holding Corporation of India (SHCIL). IDBI Bank had a net income of Rs 9415. The following year. gold card etc. 900 ATMs and 319 centers. mainly in terms of reach. Q. IDBI Bank acquired United Western Bank (which. in overall ratings. IDBI Bank is counted amongst the leading public sector banks of India. Q. In credit card silver card. They should maintain an account with the bank. Apart from being involved in banking services. IDBI has set up institutions like The National Stock Exchange of India (NSE). When such cards are issued what customers should do for that? A.9 crores and total assets of Rs 120.601 crores. while providing an array of wholesale and retail banking products (and does so till date). The new entity continued to its development finance role.Customer attitude towards plastic money The year 2005 witnessed the merger of IDBI Bank with the Industrial Development Bank of India Ltd. apart from claiming the distinction of being the 4th largest bank. in 9 states). had 230 branches spread over 47 districts. How many types of cards do you issue? A. Debit card and Credit card. It is presently regarded as the tenth largest development bank in the world. In the financial year of 2008. This is because of its wide network of 509 branches. The National Securities Depository Services Ltd. at that time. What are the new ideas coming in respect of plastic money? 81 .

Air ticket. Out of 20.000 customers not less than 1. Some people in our bank especially old people even if they had applied for plastic money and they got it still they return it because they are habitual to paper currency they feel that plastic money is more risky as compared to paper money but which is not the case if plastic money is lost you can stop the payment by contacting to the bank but if plastic money is lost it is lost forever. Plastic money is an way to deal with daily needs. Now-a-days fake notes are available of many denomination such as 1000.Customer attitude towards plastic money A.000 people use plastic cards. What do you think about fake notes? A. Q. If same courier is made to issue both card and pin then he can use the customer’s card. The card and pin issued by the two different couriers is verified by the bank through customers.e. The fake notes can be identified by our finger tip which is sensitive because the original notes quality i. What is your opinion about plastic money? A.100. So according to me plastic money is still growing. 20. 500. Q. Railway reservation ticket.g. 50. Mobile banking all this can be made through plastic cards. How do you issue pin no. to customers why precautions to be taken? A. The card and pin is issued to customers by two different couriers to avoid frauds for e. paper quality is far more different than fake notes and as we are very habitual to paper notes so it is easily identifiable. Q. 82 . Plastic money are more used by middle and younger generation people. How many customers in your bank use plastic card? A. Q.

People can take credit through plastic money i. out of which many of the people are unaware of it and many of the people are not comfortable or don’t want use it as they feel that paper notes are more safer than plastic money. The transactions take place in plastic money is very easy and customers get satisfied easily. 83 . Out of 100% only 10-20% people use plastic money approx.e. Since paper notes are more risky than plastic money. It is also observed that there are frauds in plastic money some of them can be solved and some of them cannot be solved. credit card as and when required.Customer attitude towards plastic money CONCLUSION Plastic money is of great use in todays busy world and as far as time saving is concerned.

Customer attitude towards plastic money 84 .

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